Researchers Find State Budget Cuts Hurt Economy, While Lawmakers Enjoy a Raise

A study released by researchers at the Keystone Research Center last week shows that public sector job losses and budget cuts have hurt the economy, and resulted in actual jobs decline in the state. Meanwhile, Corbett and legislators enjoyed themselves a raise.

Mark Price, the author of the study “Public-sector Job Losses Put Brakes on Pennsylvania’s Recovery,” found that cuts in public spending resulted in a 1 percent increase in public unemployment, and a 2 percent unemployment hike in the private sector as a result.

But beyond the raw numbers, there are human stories of people losing essential services because of the cuts. “In the report we talk about people who had applications for public assistance – for health care, or food stamps. Those applications were denied, not because they weren’t qualified, but because they didn’t have enough staff to process them,” he said.

He and his colleague examined states that cut their budgets during the recession, versus those that continued spending. “States that cut their budgets experienced slower growth,” he said. “When you cut public sector spending, you shrink the economy.”

In the 2011-2012 budget, Pennsylvania school districts lost $860 million, equal to about $410 per student. In Philadelphia, austerity measures resulted in 1,967 public jobs lost, a number that swells to 5,150 for the Metropolitan Division.

Then there are mounting caseloads in the Department of Public Welfare, which lost $56 million from its budget and 13 percent of its employees. Their caseload doubled this year, resulting in 492 food stamp and Medicaid cases per caseworker. One anecdote from the report illustrates how these abstract numbers can translate into tangible catastrophe:

Tracey Clark is a nurse in Pittsburgh. Her 5-year-old son, Alexander, is in treatment for leukemia. Alexander receives benefits from his mother’s employer-based health plan but, as a child with a life-threatening illness, he is also eligible for supplemental insurance through Medical Assistance. Early this year, Tracey called the local office to ensure she would receive her paperwork. When it arrived, she filled it out promptly and mailed it back. In June, she called the office again and was told Alexander’s paperwork was missing. Tracey filled out and sent the renewal packet again. In August, she received a termination letter stating that Alexander’s paperwork was not on file.

While the economy shoulders the spending cuts, lawmakers and executive officials enjoyed an automatic 3 percent raise in their salaries last week. Lawmakers will get a raise of $3,000 each per year, to over $82,000, and legislative leaders will see their pay raised from $115,000 to $118,000. They also pay less than average for health insurance ($800 per year, versus $5,400 for the average American worker), begin collecting pensions at 50, and enjoy expense accounts of $157 per day for food and housing that don’t need to be tracked with receipts.

Some legislators will give their raises back to the state; some will keep it. Either way, it amounts to more inequity in the system. Price, however, thinks that they should do some restructuring, because austerity measures aren’t working. “There are some budget cuts that aren’t completely necessary,” he said. “Some say austerity economics helps the economy. That’s just plainly false. It takes resources away, sometimes from public employees, sometimes from people who need services, sometimes from private companies who provide essential services.”

“Lawmakers should ease the suffering of people who are affected most by the bad economy,” he said.

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4 Responses to “ Researchers Find State Budget Cuts Hurt Economy, While Lawmakers Enjoy a Raise ”

  1. [...] today witf: PA Society: Toomey ready to work with Casey WJTV: Latest Pennsylvania Business Philly Weekly: Researchers find state budget cuts hurt economy, while lawmakers enjoy a raise StateImpact: [...]

  2. Carol Levy says:

    “Toomey ready to work with Casey.”? Well how kind of him to (maybe, hopefully) decide there should be some bipartisanship and give and take.
    When Toomey was appointed to the ’super committee’ there was no doubt the intentiion was to cause a stalement and force the mandatory cuts. Maybe now Toomey is ready to do what a representative of the people is supposed to do; represent and work for the good of the people, not the party and ideology.

  3. [...] today witf: PA Society: Toomey ready to work with Casey WJTV: Latest Pennsylvania Business Philly Weekly: Researchers find state budget cuts hurt economy, while lawmakers enjoy a raise StateImpact: [...]

  4. [...] $3 billion seems like a lot, it is. While preparation and open gratification offices humour budget cuts, a oil, gas and spark attention suffer taxation exemptions, incentives, and other advantages that [...]

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